'Extraordinarily damaging': Trump will be forced to back down on trade war, says UK minister

United States President Donald Trump will be forced to back down on tariffs on goods such as steel and aluminium because it will ultimately hurt his voters, Britain’s Investment Minister Graham Stuart says.

Mr Stuart, who was in Australia this week to increase investment ties between the United Kingdom and Australia, said Mr Trump’s 25 per cent tariff on steel, in which Australia was spared, would also likely carve out Britain.

Mr Trump has previously indicated nations who are “friends” and that spend big on defence could be spared from the tariffs.

Britain’s Investment Minister Graham Stuart was in Australia this week to increase investment ties between the UK and Australia.Credit:Simon Schluter

“I hope solutions can be found that don’t see a tit-for-tat escalation in the use of tariffs,” Mr Stuart told Fairfax Media on brief visit to Melbourne. He stopped en route to China where he will also be looking at boosting investment.

“That would be extraordinarily damaging and would cost jobs everywhere, not least in the US. And I hope and expect that negative outcome [the tariffs being imposed] won’t occur.”

Mr Stuart said when it came to steel there were far more jobs in the downstream industries than there were in the direct production.

“In previous administrations we’ve seen moves in this kind of direction, which have been corrected when it turned out that the thousands of jobs you save on the one hand are outweighed by the hundreds of thousands of jobs which are lost on the other," he said.

US President Donald Trump's 25 per cent tariff on steel, in which Australia was spared, could also carve out Britain.
Credit:Bloomberg

Mr Trump would be swayed by that reality. “The President’s interest is delivering what’s best for the USA and his voters," Mr Stuart said. "If policies don’t deliver for those people then those policies will change.”

The President’s interest is delivering what’s best for the USA and his voters

UK Investment Minister Graham Stuart

Britain remained committed to free and open trade and was also in close dialogue with China.

"We have a strengthening trading relationship with China and we recognise their increasing importance in the global trading system," he said.

Britain would also work with allies such as Australia and New Zealand to push against tarriffs and instead "champion a rules-based liberal world order that has brought so much benefit to humanity in both developed and developing countries".

Since Brexit, Britain had prioritised Australia with a working group focused on how to boost trade ties.

He met with Trade Minister Trade Minister Steven Ciobo this week, after a joint UK-Australian investment report found the investment relationship between the UK and Australia grew by 22 per cent from 2010 to 2017 to more than £50 billion.

Trade Minister Steven Ciobo Credit:Alex Ellinghausen

Combined trade between the UK and Australia was £16 billion in 2018 and the UK is now the second-largest destination for Australian foreign direct investment (FDI).

More than 500 Australian companies operate in the UK, and more than 1,200 UK companies are in Australia, employing 95,000 people.

Mr Stuart said infrastructure, fintech and life sciences were core areas of focus for trade between the two countries.

On Tuesday Mr Stuart met with Australian Super CEO Ian Silk and other superannuation funds to discuss how funds can invest into new infrastructure projects in Britain.

“In the UK we have £600 billion worth of infrastructure projects, which we hope that Australian super [funds] will join with other global investors in helping come into place,” he said.